Small-cap round-up: featuring Premier Foods, Hotel Chocolat and more

Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small cap stocks…

Premier Foods (LON:PFD) – plenty of time to get cooking before the updates

A very good article in last Saturday’s Times Business News about Alex Whitehouse, the chief executive of this British foods group.

The St. Albans based food manufacturer has an impressive portfolio of well-known brands, including Ambrosia, Angel Delight, Atora, Batchelors, Be-Ro, Birds, Bisto, Homepride, Lyons, Marvel, McDougalls, Mr Kipling, OXO, Paxo, Saxa, Sharwoods, and Smash.

It also operates under license from Cadburys for mini-rolls, Peckish Rice Crackers under a deal with Nissin Australia, and from Loyd Grossman for its sauces.

The article noted that as spending on groceries in Britain has grown at the fastest pace in 16 years, so too Premier’s sales have risen by a fifth as consumers first turned to family favourites before trying new recipes as the lockdown set in.

It has been such good business for the group, needing it to take on another 100 employees as it boosted production in four of its factories to 24/7 operations, thereby ensuring customer supply of its products.

Certainly, its baking and breadmaking products saw an immediate uplift, while some of its lesser known products enjoyed even faster sales growth.

This coming Wednesday (29) the group is due to announce its Q1 Trading Update for the thirteen weeks to 27 June. They should reflect that growth noted above.

Then further confirmation of first-half trading should be given at the group’s AGM on Wednesday 12 August.

I like the price movement potential of that roll-out of news.

The shares, which closed at 85.5p on Friday night, have been as high as 94p since my profile.

Even now they are up almost 27% in under a month.

However, that bit of profit-taking that pulled them back from their recent peak gives a buying opportunity ahead of the Q1 trading update and the AGM statement.

Profile 29.06.20 @ 67.5p set a Target Price of 101p.

Braemar Shipping Services (LON:BMS) – weigh anchors, this one is ready to sail away

“We have started this year positively, particularly in Shipbroking, with current trading well supported by a strong forward order book and we look forward to the future with cautious optimism.”

Ronald Series the Executive Chairman of this group was very positive when he announced the company’s finals in the middle of last month.

Braemar is a leading international provider of shipbroking, financial advisory, logistics and engineering services to the shipping and energy industries.

It has shown an improved performance in volatile markets and when the group holds its AGM on Wednesday 19 August I will look forward to a ‘cautiously optimistic’ current-year trading update statement.

On Friday there were buyers of the group’s shares, paying up to 132p for stock.

So, is it now time to weigh up Braemar’s anchor and let it sail away again?

I like this company and its service offer and consider that its shares at Friday night’s closing price of around 128.5p are now on the move upwards and that my after-Covid-19 price objective will be achieved very soon.

Profile 05.12.19 @ 185p set an end-2020 Target Price of 250p.

Profile 20.05.20 @ 99p set a Target Price of 150p.

Alumasc Group (LON:ALU) – Trading Update leads to positive hopes for September

Last Thursday this premium building products, systems and solutions group provided a trading statement for its year to end-June.

Sales in May and June were significantly ahead of internal forecasts and the year ended with improved trading helping to knock only about 16% off its annual sales.

Already that late strength has been followed through into July, with all of its sites now being fully operational and with its social distancing measures not affecting productivity.

The group’s finals will be released in September, by which time I would expect that the shares, which closed at just 69.5p on Friday night, could well be trading again at above the 80p level.

It is too early for profit guidance from the company but by late September that may be different.

I remain totally positive about this group, its products, its markets and its potential.

My recent price objective will be soon attained, remains my prediction.

Profile 13.02.20 @ 116p set an end-2020 Target Price of 145p.

Profile 08.06.20 @ 80p set a Target Price of 105p.

Hotel Chocolat (LON:HOTC) – unless there is a bid its shares are expensive

Like so many other retailing groups, this speciality chocolates retailer, during the lockdown has experienced a massive uplift in its online business.

In fact, last week the company informed shareholders that its online sales in that period had been up a massive 200% year-on-year.

That news saw the shares pick up a clear 10% to close the week at 305p.

I foresee a major strategic rethink in the group’s operational plans going forward. Perhaps a culling of some of the not-too-profitable stores in its retail estate, while released and new funds are spent upon a mega-revamp of its online offering and service.

The shares are still way below my own aims, but those were pre-Covid. Unless there is a private equity bidder around, it is going to be some time before the group’s financial performance will justify anywhere close to the current rating.

Profile 21.03.19 @ 340p set an end-2020 Target Price of 402p*.